Inside Differing State Approaches to Prediction Market Taxes

State and Local Tax (SALT) attorneys Jennifer Karpchuk and Kyle Wingfield co-authored a Law360 article analyzing the state tax and regulatory landscape surrounding prediction markets. The authors explain how the rapid growth of prediction market platforms has prompted a range of state responses, from enforcement actions and gaming taxes to new tax regimes designed specifically for these platforms. They explore the ongoing jurisdictional dispute between states and the U.S. Commodity Futures Trading Commission (CFTC), highlighting key issues involving federal preemption, tax characterization, nexus, sourcing, apportionment and compliance. They also examine how differing approaches in states such as Kentucky, Illinois and North Carolina could shape the future taxation and regulation of prediction markets, creating significant implications for businesses, tax practitioners and the digital economy.

The authors also published a Holland & Knight alert on this topic.

READ: Inside Differing State Approaches to Prediction Market Taxes